Updates with company's response

July 20 (Reuters) - Google is developing a new server chip that would incorporate elements of its Gemini model directly into the hardware, in a bid to serve its AI models more efficiently to users, the Information reported on Monday, citing people familiar with the matter.

The Alphabet-owned GOOGL.O company expects the new chip, informally dubbed "Frozen v2," to help address an AI computing capacity crunch that has fueled internal tensions and prompted Google Cloud to decline deals with outside customers, the report said.

Shares of Alphabet were up 3.3% in early trading.

Here are some details:

• Google plans to deploy the chip as soon as 2028, though engineers are still finalizing its design and the amount of model information that will be hardwired, the report said.

• The chip could be six to 10 times more efficient than Google's latest custom AI chips based on the number of AI tokens served per unit of power, according to the report.

• "Our teams are constantly researching and experimenting with new innovations... By co-designing our hardware and software from the ground up, we ensure our systems are integrated and highly optimized," a Google Cloud spokesperson said.

• The 'Frozen' project is aimed at creating a new set of homegrown chips apart from Google's tensor processing units (TPUs), rather than replacing them, the report said.

• Bloomberg News reported last week that Google delayed the launch of its latest Gemini AI model after it fell short of internal goals, with the company working to improve its capabilities, particularly in ‌coding.